For developing countries still owe 4 trillion and counting.

For the past
four years, Japan has been able to maintain itself as the world’s third largest
economic power in the world. Economic growth in 2016 was 1% after which it increased
to 1.2% in 2017. It is estimated to pick up to 1.5% in 2018 and will remain
close to 1% in 2019.  The Japanese have
been able to manage a significant GDP of approximately $4.84 trillion (since
2012) falling third behind China. Japan continues to be heading towards its
prosperous goal of being the strongest economy in the world, not just by desire
but by determination and positive results.

 

Over past 30 years, Japan has been the second largest aid donor in
the world with providing around $200 billion towards supporting the growth of
developing countries. Last year in July’17, the Japanese government signed a
deal with the government of Kenya to provide a loan of approximately 12.4
billion yen for the
development of Mombasa Port area (which is the gateway to East Africa).

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Mombasa Port has seen its volume of cargo grow rapidly in recent years. To
accommodate this growth, the Japanese government has provided funds to build a
new terminal in Mombasa. This expansion is expected to increase revenues from
import and export for Kenya thus benefiting the economy.

Not just the African countries, but Japan has also provided loans
of around $1 billion to the Philippines. The loan was provided to fund key
infrastructure projects that would help increase governmental income therefore,
assuring economic growth in the country. 

The Japanese understand that the payback of these loans will be
difficult for the developing countries, therefore even after almost a decade of
cancelation of bills and debts, developing countries still owe 4 trillion and
counting. In fact, even if developing countries try to pay off their debts, it
will surely create a deficit in their balance of payment. Leading to the same
issues for why these loans were provided in the first place. Not only their
balance of payment, but also their infrastructure, imports, and government
revenue will be indirectly affected.

On the other hand, if these loans are not paid back, it will cause
financial imbalance for the creditors, thus debt relief should not be and is
not a solution for this growing international issue. However Japan is ready to
take such a risk for assisting the developing countries, as Japan cuts out 940
billion yen in debt rescheduling to date and a has a debt relief policy of
cutting debts by even up to the 80% ceiling if necessary. Nonetheless, the
Japanese feel reaching an affordable and reliable solution is no more a want,
but has become a need for the betterment of our future together.

 

Japan strongly feels that an assured solution of this issue is
Foreign Direct Investment (FDI) in developing nations. FDI’s would benefit both
the creditors and the debtors, as there will repartition of profits back to the
home country as well as tax revenue for the host country will increase.

Other than that, FDI’s will also help increase aggregate demand as
it creates more job opportunities, ergo increasing people’s income and
indirectly affecting standard of living in a positive manner. All this will
help increase GDP for developing nations and thus assist them to pay of these
debts efficiently.

As
one of the most active members of the World Bank committee, Japan is ready to
continue its work towards hunting down solutions for a prosperous, stable and
committed forthcoming era.